Zynga Withdraws Plan For Real-Money Gambling In The USJuly 26, 2013 12:08 pm
In April this year, San Francisco based social games specialist, Zynga, partnered up with bwin.party and launched real-money gambling in the U.K. The move was seen by the company as a strategic way of entering the real-money gambling market, but just a few month on and now Zynga Inc appears to have abandoned its efforts to obtain a gambling license in the U.S.
The surprise news comes on the back of a batch of disappointing earnings announced on Thurday, with the business reporting a 38% decline in revenues to $230.7 million for the three months to June 30th, resulting in a $15.8 million loss for Zynga.
Apparently, the decision by Zynga to withdraw from seeking a real-money gambling license in the US marks a decision by the company to concentrate on its core competencies, rather than become involved in a business for which it is not designed. There may also have been worries as to the length of time required to obtain a US gambling licence, as well as concerns that the highly regulated gambling market would affect its overall flexibility and make it difficult for Zynga to make minor changes to their game codes without first getting approval from the regulating gambling body. As a gambling expert explains:
“Part of the reason Zynga has been successful historically is that they’re able to iterate rapidly. But iterating quickly when you’re regulated is not an easy thing.”
Elaborating further on Zynga’s vision of the future, chief executive Don Mattrick signalled his intention to focus on Zynga’s tried-and-tested products such as FarmVille, and also concentrate on offering free-to-play games on mobile devices.
“It’s clear that the market opportunity around us is growing at an incredible clip. It’s also clear that today we are missing out on the platform growth that Apple, Google and Facebook are seeing. In short, we can do better,” explained Mattrick.
Meanwhile, following the announcement Zynga shares plunged 14% to $3.02, which roughly represents a 70% drop off from its original IPO price of $10.